Colorado lawmakers were active in tort reform and other property/casualty initiatives during the 1999 legislative session. Measures have been signed into law that:

* Grant licensed physicians immunity from civil liability while performing volunteer work.

* Grant limited immunity from civil liability to an employer that provides information about an employee to a prospective employer of that employee.

* Limit a business’ liability for damages in any civil action based upon a Y2K failure to the amount of actual damages. In addition, civil actions must be brought within three years of the alleged cause of action.

The act, which takes effect July 1, also grants immunity to a business and its directors and officers if what the bill terms “reasonable and timely efforts” have been made to identify potential Y2K failures in order to attempt to prevent them.

Another new law amends Colorado employment discrimination laws by making harassment during the course of employment an unfair employment practice. The law, effective July 1, defines “harass” as “to create a hostile work environment based on an individual’s race, national origin, sex, disability, age or religion.”

Idaho Gov. Dirk Kempthorne signed into law a measure that immunizes employers from being held liable for information an employee might disclose to an employee assistance program counselor. The measure also guarantees employees the right to confidentiality in these sessions.

That measure-and another that failed-were drawn up in response to a 1998 Idaho Supreme Court decision that created a new liability for employers, said Dawn Justice, vp-human resources at the Idaho Assn. of Commerce & Industry in Boise.

Insurers in Montana no longer can non-renew or cancel insurance policies based on a single loss unless the terms of the cancellation previously were discussed with the policyholder.

Under another law, the Montana Insurance Department now has just two years from the date of discovery to investigate and prosecute suspected insurance law violations. In addition, the triggering violations must have occurred within five years’ of the date of their discovery.

Also in Montana, clinics that provide free health care now are exempt from tort liability.

Nevada becomes a captive domicile effective Oct. 1 under legislation signed by Gov. Kenny Guinn earlier this month that provides for the licensing and regulation of captive insurers.

Although the bill permits single-parent captives, it was intended to be most attractive to group, association and agency-owned captives, said Allon J. Greene, principal with Tustin, Calif.-based consulting firm New Directions Group. He said he drafted the legislation along with former Nevada Insurance Commissioner James Wadhams.

The measure calls for the Insurance Commissioner immediately to establish regulations to carry out the act’s provisions. Mr. Greene said the legislation “uses the best parts of both Bermuda and Vermont’s captive laws.”

Also in Nevada, legislators approved a bill that says if a party to an arbitration requests a jury trial, the arbitrator’s findings must be submitted into evidence. Another law authorizes parties in civil actions to use a settlement conference, short trial and other alternative methods of resolving disputes if the state Supreme Court adopts rules authorizing these methods. Both laws take effect Oct. 1.

A new law in Utah that took effect June 2 restores proportional liability provisions that had been removed by a court case last year. It allows the allocation of fault in negligence actions to be attributed to all parties who contributed to the injury. Another bill focused on arbitration agreements by physicians and other health care providers and patients. The law, which took effect May 2, details provisions that must be included in binding arbitration agreements, as well as the requirements such agreements must meet.

Several insurance-related bills have been signed into law in Wyoming:

* Insurers no longer are required to issue non-renewal or cancellation notices to policyholders when: a property/casualty insurance policy is transferred from an insurer to an affiliated insurer under common management and control; the insurer changes as a result of a merger, acquisition or company restructuring; or the transfer results in the same or broader coverage.

* Wyoming is permitting tax-exempt religious and charitable organizations to self-insure their auto liability coverage obligations if they can demonstrate to the state auditor that they have met certain minimum financial responsibility requirements. Instead of proof of insurance, these groups may now file cash, securities or a surety bond in the amount of $50,000.

* Wyoming has adopted the National Assn. of Insurance Commissioners’ model act that treats service contracts and other types of warranties as insurance products for regulatory purposes. Now companies and organizations that sell such contracts in the state must either purchase reinsurance to back them up or establish reserves to ensure they will meet their obligations. Fees paid for the service contracts will not be subject to state premium taxes, however.* The Wyoming Legislature has granted civil immunity to government entities and their employees for any computational, operational or interpretive errors, malfunctions or failures caused by the Y2K date change. The immunity pertains to all types of computer and information system hardware and software, including, but not limited to, devices containing date-dependent embedded chips.

Ed Names has led Meteor Industries through 11 acquisitions in six years — and he plans to pick up the pace.

As the world’s major integrated oil companies continue to shock the business world with mega-merger upon mega-merger, making changes that impact virtually every consumer of petroleum products in the U.S. and parts of Europe, an acquisition spree of a much smaller scale is taking place in the Rocky Mountains.

While a half-dozen mergers and acqusitions among the majors and a similar number by several regional convenience store chains have made national headlines, Meteor Industries Inc. has quietly doubled that activity since its inception in 1993.

While it does operate and supply some retail facilities — 19 retail outlets and 65 branded dealers — and is currently the largest Sinclair fuel distributor in the nation, the Denver-based company’s bread and butter is in the wholesale and commercial fueling business. The company markets approximately 100 million gallons of diesel fuel, 50 million gallons of gasoline, 5 million gallons of bulk grease, lubricants and antifreeze and 10 million gallons of propane annually.

While Meteor’s two-acquisition-a-year pace may have caught the attention of independent petroleum marketers in and out of the Rocky Mountain region, the business has remained relatively low key, most likely because it has set its sights on the somewhat less-glamorous aspects of the petroleum marketing business.

While its businesses are not highly visible to many outside the industry, what should turn the head of anyone with a degree of business sense is the way in which Meteor has come to achieve annual revenues of $145 million, with 13 offices in 10 states, 350 employees and a fleet of more than 100 delivery vehicles in just six years.

The company was founded in Sept. 1993 when its current president and CEO, Edward J. Names, and Director and CFO Dennis R. Staal, purchased Graves Oil and Butane Inc. for $7.5 million. The partners decided to remain in the business and developed an expansion-through-acquisition plan that resulted in 10 more acquisitions — its most recent being the purchase of Denver-based Carroll Oil Co. in May for approximately $4 million (see chart, page 18).

Names recently discussed the company’s rapid growth and its plans fur the future with This Week In Denver.

TWID: What was it about the petroleum marketing industry that initially piqued your interest in terms of an investment and a business opportunity?

Names: We hadn’t looked into this industry initially before the opportunity to buy Graves Oil came along. The company had sales of about $35 million when we bought it and it was in every aspect of the petroleum business. It had retail, it had wholesale, it had propane, it had diesel fuel. It operated five or six retail sites; it was really a larger company from the wholesale and commercial side. And that’s what we still are today. We’ve kept a fairly consistent product mix in similar ratio to the Graves acquisition. While we were working on the acquisition and putting together the financing, we decided that this was a very good industry in which to continue to make acquisitions and to continue to grow the size of the company number of acquisitions per year.

We think we’ve grown in a relatively conservative way. We have increased our revenues, our cash flow and our profitability in a kind of stair-step method without trying to acquire too many companies at once and then having a profitability problem or cash flow problem. We try to take a relatively conservative approach. It’s hard to say “conservative” when it looks like we’ve grown so rapidly — and we have — but we try not to overload ourselves.

TWID: How are you seeking out acquisition opportunities? If there are few suitors for full-line petroleum marketing companies, are marketers coming to you to talk about possible deals?

Names: Of the people in the industry who we talk to, some are interested in what we’re doing, some are interested in talking to us in the future, some just want to know what we’re doing and other people are just ready to sell for some reason or another.

TWID: With so much consolidation taking place in the industry, both among the major oil companies and regional convenience store chains, are the marketers you deal with under any extra pressure to sell? Is there a “get bigger or get out” movement developing among them? Is there momentum building?

Names: We haven’t yet been in a position where we bid on a company that’s for sale. Most of the companies we’ve acquired really weren’t for sale, at least publicly for sale. We just talked to them and determined a reasonable price. We have flexible purchase terms; we don’t have a cookie-cutter approach to getting an acquisition done, so we work with the accountants (usually of the seller) and try to determine what the best structure is for their tax requirements. And we have in-house capability to assist in the structuring of those transactions.

We’ve looked at and purchased companies that were generally in good cash-flow situations and were well managed companies, so I don’t think the pressure to sell was related to not having a successful business, and I didn’t really see that there was a major pressure to sell. Usually, it was that the owner was just ready to sell and, whether it was for personal reasons or the owner really was just ready to retire, those aren’t always consistent. But there are a number of marketers who are ready to retire and they’re looking toward their future and they need to have a plan. We’re just one option. But, as you know and the industry knows, things are changing so rapidly and industry change oftentimes motivates people to look at their business plan and determine what to do next. I think it does build a momentum.

I also think we have some interest to some of those people who are just not certain what they’re going to do in the future because they’ve seen us make some acquisitions, and do that relatively successfully. They have also seen that when we acquire a company we keep most of the employees, the employees are still working for the company and we promote many of the employees.

TWID: That must make each subsequent deal go more smoothly, doesn’t it?

Names: We see that as one of our real strengths, that when we acquire a company, we have the ability to take the management of a company that we’ve acquired and, as a public company, we can allow those people to have a stake in the company, through a share position or an option position.

I think that’s very important to a lot of sellers, that the business stays intact and the employees have positions. I think that sets us apart. We also can usually give them a little bit more responsibility than the prior owner did because the prior owners generally have been very active in running the business. So they see the opportunity in a growing company to progress and be promoted down the line, so we feel that we bring opportunity to the management of these companies. They see not only that Meteor is growing, but we bring to that local distribution center some of those synergies and some of the benefits that we’ve been talking about.

TWID: Having brought these various companies together, which of Meteor’s businesses will serve as its main growth engine in the near future?

Names: From an internal growth standpoint, we’re very interested in expanding our cardlock business. I see that as a real internal growth engine for the business. We just signed an agreement with Commercial Fueling Network and it is branding our current cardlocks CFN. We had our own proprietary cards. For us, since we’re primarily a commercial business, those customers either have large fleets or small fleets or both and, again, we want to be able to sell a complete line of products and services through our own cardlocks. It’s very advantageous to us to make sure our commercial customers have enough sites for them to fuel their vehicles. We also see an opportunity to sell lubricants, propane and other products to these commercial customers.

TWID: What are your plans for the Meteor brand? Is it your plan to re-brand all of the businesses you acquire or will they retain existing brands?

Names: We think that many of the businesses names have real customer value and brand identification in the regions where they do business. But, ultimately, when we feel that time is right, we most likely will turn all the business into Meteor businesses. For companies with strong brand equity like Fleischli Oil, for example, it is a much slower process. I think it’s very expensive and really kind of a long haul to change a brand identity.

TWID: Speaking of brand identification, what impact has consolidation among the major oil companies had on your segment of the market and your strategy?

Names: I think the biggest challenge the industry is facing today is the uncertainty surrounding the major oil company consolidation. They continue to merge, they continue to consolidate the marketing end of the business, they continue to change their business plans, and you can’t predict any of that. We’ve put together a strategy and a business plan that we think will be affected the least by the changes in how they do business.

Actually, we think there is a substantial opportunity because when these mergers occur, almost always — either immediately or a year later, or two or three years later — the major oil companies are selling assets. We feel that as a public company that has the ability to raise capital in different ways and with a more flexible financing strategy, we might be able to take advantage of that. We see ourselves potentially acquiring retail sites from a major. Retail sites, terminal facilities, whatever. When a major oil company merges, what they don’t think is strategic for them might very well be a fit for us.

TWID: Being as retailing makes up only a portion of your overall business — you’re actually most involved in the less-glamorous aspects of the industry — how has Wall Street viewed Meteor, in your opinion?

Names: I think what we have shown the investment community is that we can consistently deliver revenues and earnings and not have major ups and downs. We doubled our size from 1994 to 1996 and we doubled our size again from 1996 to 1998. And we doubled our cash flow, our sales, our earnings per share and we doubled our total assets. We’ve been able to be consistent and I think we’re now getting some recognition for that, even though we have a relatively small market capitalization and we’re in an industry that’s not as exciting as the high-tech and Internet situations. It takes a lot of work to get that attention.

We see ourselves getting fairly large over the next two or three years. Our goal is to have sales in the $300 to $500 million range per year. Basically over the five-year period, we’ve put together a good distribution infrastructure in a fast-growing region of the country.